Beyond Sustainability: Why impact investing is smart business
Companies that lead with purpose outperform. Impact investing shows you how
Last Updated: Jul 31, 2025, 11:56 IST3 min
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"Today"s business challenge: how can a company profit from solving the world"s problems, not from creating them?"
- Paul Polman, former CEO, Unilever
The above is a great call-to-action from Paul Polman and Andrew Winston"s best-selling book Net Positive: How Courageous Companies Thrive by Giving More than They Take. Becoming net positive may take you some time, not only to read the book, but to improve what your company produces and how it operates, in terms of environmental and social impact.
Is there anything you can do in the meantime?
You can invest in initiatives that earn market or above-market returns AND address environmental and social goals—Impact Investing (II). Is focusing on broader impact connected to better performance? Yes. In a Harvard Business Review interview, Poleman shared: "We"ve also seen backed up by data that companies driven by stronger purpose, longer term models, putting sustainability at the core, in general [have] significantly outperformed their peer groups…."
Many corporations are joining the movement via impact venture arms (e.g. Salesforce Ventures Impact Fund) and are making direct investments and partnerships that further SDG and ESG goals. In fact, Brunel Pension Partnership ($50+ billion Assets Under Management (AUM)) announced that 40 percent of their new investment vehicle would be devoted to impact investing.
The II market is currently estimated at over $1.5 trillion AUM with a compound annual growth rate of 21 percent. According to a survey by Impact Investment Exchange (IIX), investors plan to increase impact investments within the next 5 years in Sub-Saharan Africa (by 53 percent), Southeast Asia (by 49 percent), East Asia (by 42 percent), and South Asia (by 39 percent). Increased institutional- and individual-investor demand are making a fundamental shift in the financial landscape.
Someday it won"t be called impact investing. It"ll just be investing.
Is the time right to pursue it? Absolutely. The UN estimates a financing gap of $2.5-4 trillion annually to achieve the Sustainable Development Goals (SDGs) by 2030. With that much need, plus an expanding range of new technologies and business models, impact investing will grow—and you can grow with it.
Key sectors for institutional investment currently include climate solutions (energy and agriculture), financial inclusion, healthcare, and education. The rest of the SDGs will follow.
Due diligence, exit planning, portfolio management, and relationship processes remain the same as traditional investing. Performance measurement and monitoring are enhanced with new measures of impact. Key trends within impact investing include increased transparency and reporting, a growing focus on measurable impact, and the rise of new financial instruments specially designed for impact investing.
II funds, bonds, equity investments, and partnerships are currently the most popular for institutions. Commercial enterprises can not only invest in startups but can also invest in social enterprises, cooperatives, and not-for-profit businesses, provided they adhere to specific legal and ethical guidelines.
That said, is money the only way to invest in impact?
No. Although the UN estimated a dollar figure for the shortfall, there"s no reason why in-kind support should not be counted. Equipment, technology, expertise, and services can all be forms of investment, e.g. data philanthropy (data, IT resources, and/or IT staff). Such resources are crucial for impact organisations" day-to-day operations, emergency services, and research.
To get started:
- Discuss with your leadership team how impact investing could help you develop new markets and establish the brand presence necessary for your growth strategy.
- Continue with your organisation"s values and what your strategy and values imply for investments. What impact you want to make, where, and how?
- Include your legal and finance teams at every stage.
- Decide how much to invest to try it out and what investment AND impact KPIs you want.
- If you"re using an investment management firm (e.g. BlackRock, Goldman Sachs, Morgan Stanley, or J P Morgan), ask about their impact investment funds and platforms.
- If needed, get advice from a consulting firm with impact investing advisory services (e.g. Bain, BCG, EY, Deloitte, McKinsey, or PWC)
- Join an organisation (e.g. Global Impact Investing Network, Asia Venture Philanthropy Network, or IIX) to learn from other investors, connect with potential investees, and explore their deal platforms and research.
- PR - share what you"re doing with shareholders, employees, consumers, and the general public.
It could be your biggest step towards net positive.
Dr CJ Meadows - Director - i2e, The Innovation & Entrepreneurship Center at SP Jain School of Global Management.
First Published: Jul 31, 2025, 11:56
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